You’ve put enough savings in an emergency fund and now you want to explore an investment strategy. The best ways to invest your money have boiled down to traditional approaches. This includes the stock market, mutual funds, retirement accounts like a Roth IRA, and savings accounts or money markets.
However, recent decades have proven that any investment can be risky when you put all your money into it. And, many traditional investment options don’t deliver a return that helps increase your nest egg.
There are plenty of options to help you create a diversified portfolio. You don’t even need a financial advisor to guide you. These options can provide a higher return and give you more control over your financial goals. They may also align more closely with your individual risk tolerance and long-term goals.
Here are seven personal finance strategies that let you move beyond that emergency fund and start investing money in a unique way with the right investments.
Use loose change to start investment through Acorns.
Apps like Acorns provide an accessible way for more people to get started with personal investing. Most brokerage accounts want you to start with a certain amount of money that is unrealistic for many consumers. However, Acorns lets you begin with the loose change in your pocket.
This investing strategy involves micro-investing the spare change that’s generated when you round up each purchase you make. As part of your investment portfolio, you can use the spare change to invest in Exchange Traded Funds (ETFs), which include a broad mix of over seven thousand stocks and bonds. It’s an easy way for new investors to get started.
Try peer-to-peer lending.
Also known as social lending, peer-to-peer lending involves a platform or marketplace where you can loan others a specified sum of money with interest that they must repay in a certain time period, whether over a short-term or longer period of time. Doing so cuts out the financial institution middleman. It helps borrowers get access to the funding they may need to launch their startup, buy equipment, or consolidate other debt.
As an investor, you can get a significant high-yield return for not much effort. This can be done as many times as you would like, with the possibility of collecting a return with each amount you lend. However, there is still some risk that the borrower could default. Some of the peer-to-peer lending platforms like Funding Circle and Lending Club may give you some protection from that risk.
Get involved in various types of crowdfunding projects, including equity and real estate.
You may already be familiar with crowdfunding where you can invest in a project or product and get some type of item in return. Then, crowdfunding moved to equity platforms that then allowed you to invest in a startup and get some type of financial return in a relatively low-risk way.
Now, there is real estate crowdfunding. With this alternative investment, certain companies or entrepreneurs want to raise capital for real estate projects. This allows you to invest in those properties without needing deep pockets, mortgage brokers, contractors, or other stakeholders. These properties might be retail, commercial, industrial or multifamily.
Many real-estate crowdfunding platforms are now launching, including ArborCrowd focused on multifamily properties and investors with a higher sum to invest. At the other end of the spectrum, GroundFloor invites investments as small as $10. In-between, there are real estate crowdfunding platforms where you can invest thousands or tens of thousands, depending on your investment comfort zone.
Invest your money in things you like.
This strategy for investing can be hit or miss and often changes with society’s interests. However, investing in things you like can also produce some enjoyment on top of a potentially higher return. Figure out what you want to invest in, such as art, jewelry, collectibles, or cars and then spend time studying that market. Look at historical sales to better understand the patterns of demand.
Consider holding these types of items as long-term investments, as it will most likely take some time to get a return. Typically, these items don’t lose value. What’s most challenging is selecting the item that becomes rare or in demand. You can visit live and online auctions to buy or also spend time scouring garage sales and “pick” through flea markets to find that one-in-a-million item.
Group-invest in real estate or franchise.
Try this option if you don’t have a lot to invest but you have the time and commitment to put in the work. Find other likeminded investors and go in together on some type of real estate property, such as an Airbnb/vacation home or long-term rental. Alternatively, you could pool your money and buy a franchise.
If you decide to pursue this investment strategy, be sure you can work with the other investors. Do they share your values, goals, and commitment? Be sure to sign an agreement and determine roles, responsibilities, and returns in advance.
Try tax lien certificates.
When a property owner doesn’t pay a tax bill, the taxing authority places a lien on the property. These tax lien certificates can be sold by the U.S. government (or other tax agency) to investors to recover delinquent property taxes. Then, homeowners can pay the delinquent amount plus interest to prevent the investor from foreclosing on the tax lien they hold. That interest pays a decent return for the investor.
However, if you decide to try this unique investment strategy, there are a few things to know. You don’t get the property, and the actual process and return will vary by location and property type. Do your research before jumping in.
Discover alternative investment products.
Precious metals investing, including gold or silver, or cryptocurrency, may also provide you with significant returns when the dollar is volatile. You can opt to buy physical metals through precious metals exchanges. Or, you can put your money in investment vehicles like gold ETFs. Cryptocurrency can also be purchased through exchanges and offer a wide range of currency types.
In both cases, there is risk to consider. Cryptocurrency especially has seen its share of stock market-like swings in pricing. Again, it’s important to do your research. Gauge your own risk tolerance before you invest your money in any of these unique investment strategies.